Brent crude surpasses $71: Highest level in 5 months amid geopolitical tensions
Global energy markets witnessed dramatic shifts at the end of trading today (Thursday), as Brent crude futures prices jumped to their highest level in five and a half months, specifically since August 1, 2025. The price per barrel reached $71.87 during trading, in a strong rise driven by increasing fears of escalating geopolitical events in the Middle East, which is the main artery of global energy supplies.
Market performance and escalating tensions
Global oil prices surged by as much as 4.66%, with West Texas Intermediate (WTI) crude surpassing $66 a barrel. These increases come amid renewed concerns about potential military conflict that could disrupt Iranian crude oil exports or have far-reaching consequences for global markets if vital shipping lanes, particularly strategic waterways used by oil tankers, are closed.
Amid the escalating tensions, US President Donald Trump stated in a social media post last Wednesday that "the US ships I ordered to the region are ready to carry out their mission swiftly and forcefully if necessary." This statement cast a long shadow over investor sentiment, further fueling market uncertainty.
Supply challenges and market factors
Despite earlier forecasts predicting a significant supply glut in 2026, prices have moved in the opposite direction since the beginning of the year. This is primarily due to geopolitical tensions stretching from the Middle East and Iran to Venezuela, as well as a major and unexpected supply disruption from Kazakhstan, which has helped support prices and keep them resilient against bearish expectations.
Risk premium and financial hedging
Recent US threats have introduced a “risk premium” into the pricing structure, even as the market faces underlying pressures stemming from an anticipated increase in global supply. This situation has led traders to pay a high premium for long-term bullish options for the longest period in nearly 14 months, as a hedge against the risk of a new, direct military confrontation between the US and Iran.
Historical context and the impact of financial markets
Historically, options markets have served as a primary channel for traders and investors to bet on escalating geopolitical risks in the Middle East in recent years. A surge in call option premiums was observed after the US launched a military strike against Iranian targets in 2025, before these premiums subsequently declined when it became clear that critical infrastructure and oil facilities had not suffered significant physical damage. Nevertheless, market sensitivity to any political statement or military action remains high, making the stability of energy prices contingent on the calming of the geopolitical front.
